Question
(20pts) Answer the following questions. (1) (4pts) Provide an example of direct finance and an example of indirect finance. (2) (4pts) The general level of
(20pts) Answer the following questions.\ (1) (4pts) Provide an example of direct finance and an example of indirect finance.\ (2) (4pts) The general level of interest rate in an economy often rises when the economy expands. What does this phenomenon imply about the impact on the supply and demand of bonds when the economy expands? Please explain.\ (3) (4pts) Suppose you have shorted a stock. What type of order would you place to protect your strategy? Please explain.\ (4) (4pts) Is it true that higher leverage always increases return on equity (ROE)? Please explain.\ (5) (4pts) Point out two differences between investing in a mutual fund and investing in an exchange traded fund. Both funds track the same stock index.
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